The top apparel retailers in the world include Inditex, Nike, Christian Dior, Hennes & Mauritz, Amazon and Louis Vuitton.
Inditex, commonly known as the owners of Zara, is one of the largest apparel retailers in the world, generating $23.27 billion in revenue in 2016. The company was founded in 1975 in Spain by Ortega Amancio and Rosalia Mera. It operates in 91 countries worldwide in over 7,000 stores. The Inditex supply chain is located in over 50 countries and has 6,298 factories and 1,725 different suppliers. Inditex suppliers are in Spain, Turkey, Portugal, Bangladesh, India and China however, 60 percent of manufacturing is produced in Spain. Specifically, Zara brand manufactures most of its apparel at company-owned factories in Spain, Portugal and Turkey which is a change from previously producing most of their clothing in-house. Zara is known to manufacture their clothes very quickly compared to competitors. This is because the company is in a “fast fashion” market segment where clothes are produced based on the current fashion trends. Therefore, they focus on speed and price because the faster they get their clothing into the store the higher the margins. As a result, to avoid lead time, Zara’s designers, manufacturers and laborers are all in one location, A Coruna in Spain, and the factory is only a few miles in Arteixo, Spain.
Hennes & Mauritz (H&M) is one of the apparel retailers in the world generating $21.17 billion in revenue. The company was founded in Sweden in 1947 by Erling Persson and now operates in 64 countries with more than 4,300 stores employing over 132,000 people. H&M has factories that are located in Asia and Europe and their supplier factories employ around 1.6 million people worldwide. H&M produces it clothes in Bangladesh, China, Turkey and India and has a total of 820 independent suppliers operating in 1,798 factories in Asia and Europe; 60 percent of the suppliers are in Asia and 40 percent are in Europe. None of the factories are owned by H&M and they rely on partner companies and a external suppliers for production. It manufactures 80 percent of its inventory in advance and the other 20 percent is based on market and fashion trend. H&M business model offers cheap clothes by outsourcing non-core operations to be able to have shorter lead times and lower production costs.
Nike is also a very large retail company worldwide with a revenue of $32.4 billion in 2016 and had a 10.7% profit margin. Nike’s largest market is in the United States where it generates 46 percent of its revenue. It distributes its clothing through three channels: selling products to wholesalers, direct to consumer sales and e-commerce sales. Nike manufactures its apparel outside the U.S through independent manufacturers because of lower costs. In 2014, Nike used 430 apparel factories in 41 different countries with the majority of suppliers in China, Vietnam, Thailand, Sri Lanka and Pakistan. Their primary distribution centers are located in Memphis and Tennessee.
Department Stores and Online Retailers
Walmart is the largest retailer in the world generating $478.6 billion dollars in revenue. Although Walmart remains at the top of the list, many other retailers are losing money to consumers who prefer online shopping. For example, Macy’s has recently closed many of their stores due to decreasing sales. Macy’s is not only hurting with sales in store but also online with $4.8 billion in e-commerce sales representing only 17.5% of its total sales. However, companies like Amazon are continuing to grow at a faster rate with a revenue of $136 billion with sales predicted to continue to grow in the near future. In addition, Amazon dominated the e-commerce category with 53 percent share of total sales growth in e-commerce. This might translate into the apparel industry as well, as more and more customers move away from the traditional forms of purchasing clothing through department stores to online forms like Amazon.